Moderated by Linqto COO Miguel Vias, the Global Investor Conference’s “Digital Wallets & Exchanges” panel featured Linqto CEO Bill Sarris and Uphold CEO Juan Pablo Thieriot.
The virtual fireside chat, complete with Bill’s fireplace background, occurred in an especially familiar atmosphere since Thieriot and Vias once worked together at Ripple. Vias has been working under Sarris for the last six months.
Linqto, which recently announced an alliance with Uphold, has described its partner as a “multi-asset platform” that allows users to make and receive payments in both traditional currencies and crypto. In only five years, Uphold has hosted transactions amounting to $4 billion. Based in the UK, the company “provides fintech software developers the ability to build secure and compliant products that can store, convert, and transfer almost any type of digital asset.”
The first topic the panelists addressed was digitalization. Thieriot referred to the long-standing problems in the realm of computer science and cryptography that blockchain technology has solved. “It created the possibility to digitize/tokenize, to create a proxy, for any asset in the world,” he said. The crypto innovator joked that if there were a strong financial interest in trading organic chickens, that could also become an asset that could be digitized.
Thieriot discusses Uphold’s future plans during the panel’s Q&A session
Thieriot believes tokenization has democratized access to real estate, private equity, fine art, venture capital, and the kind of investments that have traditionally only been accessible to the wealthiest denizens of the northern hemisphere. “By digitizing access to these assets and fractionalizing them,” he said, “you create the opportunity for really anybody to participate. Not everybody has the money to buy an apartment in NYC and derive rental income from it, not everybody has the money to buy an entire share of Amazon, but when you fractionalize them and make them available via mobile devices from anywhere in the world, that is really an important step for humanity.”
Sarris also referred to the phenomenon of digitalization, making an analogy with the invention of the first coin, which created the first known “abstraction of value.” The head of Linqto praised Bitcoin creator Satoshi Nakamoto as a genius for endowing his creation with both decentralization and immutability. He also emphasized the distinction between Bitcoin and blockchain, a technology that is starting to be applied in virtually every industry. “It has now become very mainstream,” he said, “so we're in a period of mainstream abstraction in terms of digitalization.”
A Quest for Transparency in Finance
For Thieriot, the greatest shortcoming of the “legacy financial system” is its lack of transparency, which became tragically apparent during the 2008 crisis. “Decentralization in the form that we have seen in the last 90 days,” he explained, “is really an extraordinary thing.”
A passionate believer in the potential of crypto to prevent censorship and “bad behavior” from central bankers and governments, Thieriot emphasized just how little transparency we currently get from banks, which are allowed to operate with very little Tier 1 capital and keep this type of information hidden from the public “until it's too late.”
Though Thieriot is all for decentralization, he says he has encountered people who are more radical than he is, hardcore decentralization enthusiasts who think Uber shouldn't exist; “it should just be an automaton that connects cars with people, it shouldn't have management or customer service, or shareholders.” Faced with such a prospect, the head of Linqto said he is still trying to “wrap [his] head around it.”
Sarris’ eclectic experience in the digital world certainly puts him in a position to wrap his head around any manner of innovation. One of the top specialists in the field of collaborative technology, he invented Linqto and has delivered key software applications for high-profile players like Microsoft, Intuit, Digital Insight, NCR, and Stanford. A Forrester Groundswell Award and Monarch innovation Award for Banking winner, he has more than ten years of experience in digital and mobile banking. Bill co-founded Linqto with Vicki Lawrence in 2010.
Though he does have an extensive track record in finance, Sarris thinks there is more to blockchain than monetary decentralization. “Blockchain allows us to decentralize anything we want, and that's very exciting,” he said. “As an engineer, you are always trying to determine when it’s better to have something centralized, and when it’s better to have it decentralized.” Considering government control and political interference, Sarris believes currency is “an excellent candidate” for decentralization.
The Future of Decentralization
On a different note, Vias said that though he is against burdensome regulations and rules, he recognizes their value in terms of protecting “people who are uninformed, who can be harmed, and can't protect themselves.” He also referred to the conflicts that arise when people do “nefarious things with money,” sometimes threatening national security. Thus, he touched upon one of the key challenges the emerging decentralized financial entities will face over the next few years.
With “regulators trying to get their hands around the brand new dawn of technological finance,” Vias asked his boss, what does the future look like? Sarris replied that one can easily forecast rapid expansion but, “it’s moving at the speed of light, and what [we] thought it would be like in September of this year was nothing like what it actually is in September of this year, and probably what we pontificate about today for where it will be a year from now will be totally off... The one thing I can say for certain,” Sarris said, “is that it will look nothing like it looks today. A transformation is happening that is not just evolutionary; it's downright revolutionary.”
The End of The Banking Experiment
Sarris did, however, forecast “the end of a 50-year central banking experiment,” which began in 1971 when Nixon severed the direct convertibility of our currency into gold. He referred to an influential analysis from Deutsche Bank Research titled, “Imagine 2030.” The document offered several predictions for the end of our decade, including “the end of fiat money.”
In their analysis, the German bank’s researchers pointed to the fragility of the current fiat system, and the potential for a backlash against fiat money, which would cause “demand for alternative currencies, such as gold or crypto,” to soar. Emphasizing the impact of labor costs, debt, and inflation, the analysts concluded, “Given the near-record level debt burdens around the world, it is likely that central banks will be forced to buy more securities again to ensure yields stay comfortably below nominal GDP. In turn, this will likely lock in higher inflation... Eventually, it is possible that inflation will become more and more embedded in our system and doubts will rise about the sustainability of fiat money... Will fiat currencies survive the policy dilemma that authorities will experience as they try to balance higher yields with record levels of debt? That’s the multi-trillion-dollar (or bitcoin) question for the decade ahead.”
Trying to explain the reasoning behind the researchers’ conclusions, Thieriot said the only reason the fiat money model has stayed afloat over the last 50 years is due to Chinese labor arbitrage, which will soon cease to work as a suppressor of inflationary forces.
COVID has forced governments worldwide to print more currency in only 90 days than in the last 200 years, he explained, and, “we're nudging up against a level of stagflation,” that we haven’t seen since Jimmy Carter was in office. In this scenario, Thieriot believes Bitcoin offers a valid alternative. “The other day, we put out a physical, non-fractional gold product that is spendable on a debit card,” he commented. “Imagine if everybody could access these new units of account that are not susceptible to the same forces as fiat currencies... It’s fascinating; it’s not going to be heavily dollarized; it’s not going to be controlled by any other government; it's going to be something new and different.”
Crypto Jumps and Space Gold
When you are in a virtual room with some of the top crypto gurus on the planet, there is one question that will always come up, namely-as Sarris put it-“when is the next crypto jump gonna be?” For Linqto’s CEO, it is impossible to get rid of inflation for good, and the excessive money printing that is taking place all over the world right now will have consequences. “It’s going to lead to inflation,” he says, “and the only way we'll stabilize is with the help of cryptocurrencies like XRP, Bitcoin, and Ethereum, and even gold as a standard, as soon as Elon Musk gets out into the outer atmosphere and starts mining gold off of all the asteroids that are circling the Earth. Gold is still an expandable supply, but Bitcoin isn’t, XRP isn’t, so that’s when you're going to see the true jump.”
The Uphold-Linqto Alliance
It was Sarris who told the story of the integration of the Uphold wallet into the Linqto platform. “We live in a more regulated world than Uphold because our investors need to be accredited investors, but so long as they're accredited investors,” he said, “why shouldn't they be able to buy our product using any type of currency they want?”
According to Sarris, strange things are happening as a result of the integration; people are using XRP to buy shares in Ripple Labs. They are even using Bitcoin to buy shares in Ripple Labs. There is a certain “ease of translation” that goes beyond crypto, as transactions on the platform can now be carried out in 27 fiat currencies.
Since Uphold’s integration into Linqto came into effect, an accredited investor from Latin America can use his Bitcoin, XRP, and different national currencies to acquire shares in technology companies. At the time, Uphold said in a statement that the alliance gave “access to around 50 million accredited investors worldwide, who are generally excluded from the private equity market. This way, they can access a very simple investment process that supports 27 national currencies and 36 types of cryptocurrencies.” According to Thieriot, his company’s collaboration with Linqto is “a huge step in Uphold’s mission to democratize access to different types of assets that are often difficult to obtain.”
Other advantages of the alliance include the ability to convert XRP to Ripple shares in a single trade and automatic conversion to USD when sending money from Uphold to Linqto. At the time of the announcement, Sarris commented, “As we continue to work to make private markets more accessible to accredited investors worldwide, I can’t think of a better partner than Uphold.”
A Safe Bet
During the Q&A that concluded the panel, a reporter mentioned a recent interview of Bitcoin bull Anthony Pompliano by Jim Cramer, the host of CNBC’s Mad Money. Apparently, Pompliano convinced Cramer to invest in crypto. Not long ago, the 65-year-old TV host had characterized Bitcoin as “Monopoly money.”
Cramer’s change of heart could suggest that the revolution is about to catch on with risk-averse boomers. After all, if everyone wants to withdraw their deposits from a bank, some people won’t be able to, but crypto platforms like Uphold have to maintain 100% reserves. If you want your crypto back, you can always get it, no matter how many governments collapse.